Bill Browder

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A businessman learns from a bad investment in Putin

I first met Bill Browder when he came to tell The Post’s editorial board that its criticism of Vladi­mir Putin was all wrong. It was the early 2000s, and Putin was persecuting independent media and their owners and flattening the republic of Chechnya. Browder, then the head of the largest Western investment fund in Russia, argued that we were missing the fact that Putin was a reformer who was replacing Russia’s post-Soviet chaos with liberal capitalism and the rule of law.

Browder was drastically — and, in the end, tragically — wrong. In 2005, Putin turned on him, and he was banned from Russia. Then his companies were seized and used by corrupt officials to steal $230 million in tax receipts. When a young lawyer hired by Browder exposed the scheme, he was arrested by those same officials and so brutally mistreated that he died in his prison cell.

To his credit, Browder has undergone an extraordinary conversion. Since the death of lawyerSergei Magnitsky in 2009, he has devoted himself almost entirely to becoming the scourge of Magnitsky’s killers — and of Putin. Thanks to his efforts, Congress passed a law in 2012 mandating sanctions against those involved in the Magnitsky case, along with other Russian human rights abuses; dozens have been subjected to a visa ban and asset freeze. Hundreds of thousands of Russians have watched Internet videos Browder has posted richly documenting the astonishing criminality of police, tax officials and judges.

Now Browder has written a book recounting in vivid and painfully honest detail his bad bet on Russia and Putin. It ought to be required reading for Western government officials and businessmen who advocate engaging the Kremlin — because even after everything that has happened in Russia during the past decade, they are inclined to make the same misjudgments.

The first is to assume, as Browder says he did, that Putin wants the same 21st-century goods as elites in the West: liberalism; rapid technological advancement; the slow ceding of the nation state to regional and global structures. Browder drew that conclusion when, after taking power in 2000, the former KGB spy began taking on Russian oligarchs who were ignoring tax laws and stealing from their shareholders. Browder, who had gotten rich investing in Russian companies, was waging the same battles.

“I naively thought that Putin was acting in the national interest and was genuinely trying to clean up Russia,” he writes. Only Putin was not trying to make the oligarchs honest; he was trying to make them his. He did not want to modernize the economy but to monopolize it for himself and his cronies. Once he succeeded, Browder’s crusade to raise Russian corporate standards was a threat to Putin’s new power and riches. “I was so wrapped up in my own success and the runaway returns of the fund that I didn’t understand this,” Browder confesses.

His next mistake was to underestimate how deeply corruption and violence were embedded in Putin’s regime. Even after he was driven from the country, Browder supposed that Putin would side with him against the police and tax officials who had hijacked his companies and used them for fraud. “I found it inconceivable that he would allow state officials to steal $230 million from his own government,” he writes.

Yet even after Browder publicized the fraud, and even after Putin and sidekick Dmitry Medvedev were challenged both in Russia and abroadabout the Magnitsky case, the corrupt officials were untouched. Instead, Browder himself, along with the deceased Magnitsky, were subjected to aMoscow show trial at which they were “convicted” of the same scam they exposed. Russia has twice petitioned Interpol to issue a “red notice” for the arrest of the London-based Browder, giving him the title of his book.

How to respond to such a regime? Here again Browder has learned from hard experience. Each time he’s challenged Putin and his cronies, he’s done so against the counsel of associates and Western government officials, who warn that Putin will respond to pressure by escalating his aggression. Browder’s conclusion: They are right, but that doesn’t mean pressure is the wrong policy. On the contrary, he says, Putin plays by “the rules of the prison yard”: Any sign of weakness is an invitation to further aggression. Only resolute counterforce can alter his behavior.

It’s a dangerous game, of course. “I have to assume there’s a very real chance that Putin or members of his regime will have me killed someday,” Browder writes. “If I am killed you will know who did it.” For now, the Russian ruler has at least one uncompromising adversary in the West — someone who has learned the truth about Vladi­mir Putin the hard way, and is not afraid to share it.